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rect nonairlift deficiencies may yet be denied or deferred unless we can clear up some of the confusion that surrounds this program. With the possible exception of the MX no program has changed configuration so often in so short a period of time. No program is as haunted by contested cost and production estimates. No other program has seen the testimony of administration officials change so dramatically from hearing to hearing and from month to month. Airlift is certainly not the most glamorous of Pentagon programs, but it is, perhaps, the most pressing military issue confronting the Congress today.

Decisions made during the next few years concerning airlift will define the extent of our ability to meet military commitments abroad for at least the next quarter of the century. If the Congress is going to faithfully execute its responsibility in this matter, we must know the facts and have accurate information. In this regard, convening this hearing was not simply appropriate, it was essential.

I wish to identify myself with your concluding remarks with respect to the intensity and ferocity of the lobbying on this issue. Lobbying is an accepted technique of petitioning Congress, but whether it is carried on at such length with such unlimited zealotry, it can, in fact, be counterproductive. I think your advice of "cool it" was sage advice and I hope it will be heeded.

Senator STEVENS. Thank you, Senator.
Senator Garn, do you have a statement?

Senator GARN. I have no opening statement.

Senator STEVENS. We have Senator Mattingly with us, a member of the full committee. Do you want to make a statement? Senator MATTINGLY. No.

Senator STEVENS. Our first witness is Clyde Skeen, senior vice president of the Boeing Co.

Mr. Skeen, I would be happy to hear your testimony.

THE BOEING CO.

STATEMENT OF CLYDE SKEEN, SENIOR VICE PRESIDENT, THE BOEING CO.

ACCOMPANIED BY MICHAEL BOYCE, 747 MILITARY AIRLIFT PROGRAM MANAGER, SEATTLE

BIOGRAPHICAL SKETCH

Mr. SKEEN. Mr. Chairman, members of the committee, I would like to thank you, sir, for providing the Boeing Co. this opportunity to present our views regarding this important airlift issue which is before Congress this year.

As you stated, my name is Clyde Skeen. I am a senior vice president of the Boeing Co. My responsibilities include direct corporate supervision of the three principal Boeing companies which do business with the Government.

I first joined the Boeing Co. right out of college in 1940 and became assistant secretary-treasurer and divisional controller in 1949, corporate controller in 1952, and I was elected vice president in charge of systems program management in 1958.

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I left the Boeing Co. in 1960 to help form a major conglomerate for which I became, successfully, executive vice president and president. This conglomerate had principal subsidiaries in aircraft design and manufacturing, aerospace, and was also the majority owner of a major U.S. airline.

I rejoined the Boeing Co. about 31⁄2 years ago, thus I am driving up on my 43d year in the aircraft, aerospace, airline, and related businesses.

Accompanying me today is Mr. Michael Boyce, sitting on my right, who is a 747 military airlift program manager. Mr. Boyce resides in Seattle.

FORMAT FOR BOEING TESTIMONY

Our plan today, Mr. Chairman, with your permission is to make some brief opening remarks which will place into perspective Boeing's analyses of the military airlift requirements and our proposal to the Defense Department for the proven 747's to resolve these requirements.

We are also prepared to answer any and all questions that you and members of the committee may have on this subject.

I will review Boeing's involvement in military airlift programs and the sequence of events which lead to my being here representing Boeing today. I will then review our airlift proposal, the airlift requirements as understood by Boeing on the basis of substantial, in-depth analyses which we have performed over the past few years.

Then finally, I will address criticisms of the 747 as a military airlifter which have been articulated over the past several months, hopefully from a dispassionate and objective viewpoint.

BOEING CO. AIRLIFT EXPERIENCE

As you may be aware, Boeing's experience with military air transport and airlift goes back many years with the C-97 and C135 which were operated by the Military Air Transport Service [MATS]. For the past 10 years, we have been directly involved with the Air Force and the Defense Department with respect to new airlift programs.

We participated directly in the advanced medium STOL transport, the so-called AMST program. We won one of the contracts to build two advance prototypes to demonstrate short takeoff and landing technology with unimproved field capability in an airplane that was intended to replace the C-130.

McDonnell-Douglas won the other contract and each of our companies designed, manufactured, and extensively flight tested two aircraft. That program cost the Government more than $200 million and the Boeing Co. made additional investment in the program of many millions of dollars.

I believe that you are aware that on the basis of demonstrated capability the AMST program was extremely successful from a technical and performance standpoint. However, the program was canceled by the prior administration.

INITIATION OF C-X PROGRAM

Now subsequent to the AMST program cancellation, the C-X program was initiated. The Defense Department and the Air Force developed a set of requirements fundamentally based on the concept of moving the rapid deployment force [RDF] from the United States to Southwest Asia because of our country's critical interests in that particular area.

The C-X requirements, as they were finally published and specified to industry as a part of the formal request for proposal, were believed by Boeing to be a very rational, sound statement of need for a versatile new airlift aircraft that could perform both the strategic airlift mission and the tactical airlift mission. Those requirements were developed at the direction of the Congress and were reported to the Congress in the form of the congressionally mandated mobility study [CMMS].

It was Boeing's opinion that the C-X program had solid Air Force, Army, Marine Corps, and Defense Department support. Therefore, we made the decision, as well as McDonnell-Douglas and Lockheed, at their own expense, participated in the preproposal and the proproposal and the proposal work for that competition.

RESULT OF CONTRACT COMPETITION

The result of the competition which took almost 2 years to be completed was that the McDonnell-Douglas Corp. was announced as the winner August 28, 1981. We were obviously disappointed at the announcement of the winner-you really never like to losesince we believe we offered a very competitive airplane and a very attractive business package to the Government. Nonetheless, we accepted the DOD decision to go ahead with the McDonnell-Douglas C-17 and we have supported that program for the national in

terests.

Now, prior to the announcement of the winner for the C-X program (now the C-17 program), the Boeing Co. submitted on June 5, 1981, a proposal to the Air Force for near-term airlift, because the C-17 initial operating capability [IOC] was 1988.

We also perceived that the Government, based upon authoritative public statements, recognized that there was indeed a very critical need to add strategic airlift capability as quickly as possible to the existing military airlift command assets.

In January of this year, the Defense Department announced its decision to set aside the C-X competition results and proceed on a sole-source procurement of 50 C-5 aircraft. A concurrent announcement was also made which indicated the procurement of 44 KC10's. The combination of these two aircraft, plus already available MAC assets, was the proposed program to address the airlift problem.

The basic rationale for the decision as publicly announced was based on a critical near-term need for strategic airlift-that is the C-5B could be delivered sooner than the C-17.

At that point, the Boeing Co. analyzed the Defense Department's program relative to the airlift requirements stated in the congressionally mandated mobility study which was addressed to the Congress. That study took a year to complete, it was approved by the

Joint Chiefs of Staff, and delivered to Congress under signature of the Secretary of Defense, and was described as the authoritative statement of requirements for mobility.

As a matter of fact, the Air Force rationale for going ahead with the C-17 program, and later the Defense Department rationale for going ahead with the C-5 program was based on the CMMS-specifically on the scenario in the CMMS which dealt with moving the Rapid Deployment Force from the United States to Southwest Asia, so-called CMMS scenario one.

The Boeing Co., having developed the sophisticated computer modeling capability and analytical tools with which to analyze the stated requirements then determined the operational impact of the Defense Department airlift decision on the movement of the RDF to Southwest Asia.

Mr. Chairman, I know in this, the day of the computer, computerized modeling tools may mean completely different things to dif ferent people. Oversimplified, we placed on the computer in detail every item, every piece of equipment, bulk, oversize and outsize, its physical measurements, weight, and the sequence of loading necessary to maintain combat unit integrity all in strict accordance with the CMMS.

This analysis clearly showed that the addition of 48 new 747 freighters to the existing MAC fleet or the addition of 50 C-5B's to the existing MAC fleet had an identical operational outcome-that is, the movement of the Rapid Deployment Force to Southwest Asia in 27 days. The data used and the ground rules used were essentially the same as DOD data. This conclusion has also been supported by Air Force systems analysis, the Congressional Budget Office and the GAO.

Again for emphasis, the Boeing analysis maintained combat unit integrity and these units were all closed in the same sequence that the CMMS demanded. The existing C-5 fleet owned by the Air Force can move all the outsized equipment associated with the RDF in 27 days.

Now as a point of reference, here the CMMS scenario one force to be airlifted is a formidable force. In fact, for comparision it is roughly equivalent in size and tonnage to the toal allied equipment which was sea-lifted by an armada of ships across the English channel to Normandy Beach in the first 6 days of that invasion. So it was at that point that the Boeing Co. attempted to contact the Defense Department in order to present the complete rationale of our analysis and to remind DOD of the existing 747 airlift proposal as a very attractive alternative, based on tremendous cost savings and earlier airlift capability.

We were unsuccessful at making personal contact with DOD leadership so we then submitted the unsolicited formal proposal which will be discussed later. I would be remiss here in not making it quite clear before your committee, Mr. Chairman, that Boeing would much have preferred to present the detailed merits of our analysis and to discuss this proposal in depth with the Department of Defense and the Air Force.

Over the years, the best customer of the Boeing Co. has been the U.S. Government, primarily the Air Force, and ordinarily a company seeks to maintain a very amicable rapport with its best custom

er. However, in our considered judgment, our proposal has not been seriously or equitably evaluated and we have no recourse other than to submit our views and rationale to the Congress.

CIVIL RESERVE AIR FLEET [CRAF] ENHANCEMENT

Aside from the new military airlifter programs, and in parallel to this Defense Department activity, the Air Force and Congress were also attempting to enhance the existing civil reserve air fleet [CRAF] cargo capability. As you are aware, all of the cargo airplanes, as well as most of the passenger airplanes owned by domestic carriers in this country, are committed to CRAF in a national emergency.

The purpose of the CRAF enhancement program was to increase the number of cargo-capable aircraft available to the Government in a national emergency with structural modifications to facilitate, thus enhance, cargo-carrying capability.

Boeing has supported the CRAF enhancement program actively since its inception. Since 1974 the Congress has authorized in excess of $500 million, and has actually appropriated $135 million to implement this program. However, the Air Force has been successful in contracting for only one DC-10-10 cargo convertible configuration lacking intercontinental range at the cost of $17 million. The concept of the CRAF enhancement program is a sound one. However, market conditions, economic conditions in the country, as well as substantial problems in pulling together the manufacturers, the airlines, the Air Force and Congress in order to make this program go has been very difficult, to say the least.

It is Boeing's view that the CRAF enhancement program is the most cost-effective way to add bulk and oversize equipment capability to our Nation's airlift fleet. However, the record shows it just has not been successful.

It is also our opinion that success of the CRAF enhancement program in the future is largely dependent upon whether or not the Defense Department is willing to compensate the airlines adequately in order to alleviate the airlines' stockholder's risk of participation in the program.

The last ill-fated attempt at this was cancelled in the final hour because, in the opinion of the Government, the cost was too high. So, while we support the CRAF enhancement program in principle, we believe that the potential for its success is dependent upon a yet to be conceived formula equitable and acceptable to all parties.

In fact, at the recent request of the Undersecretary of Defense, the Boeing Co. has surveyed the airlines, our customers, for a consensus of what might be an acceptable CRAF enhancement program to them and has recently transmitted to the Undersecretary for consideration a draft of a request for proposal.

As I implied, however, this is only one-half of the needed equation. The DOD, the Air Force, and the Congress must agree upon the amount of cost to reasonably compensate the airlines, not only for the physical modifications needed to the aircraft, but also for the loss of revenues in certain instances and for carrying around for an extended period-sometimes the remaining life cycle of the

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